The Metamorphosis: Expected Changes in the Brazilian Debt-for-Nature Swap Process and Policy Implications

This Note argues that the new Brazilian debt-for-nature swap legislation, if passed in its current form, will make debt-for-nature swaps in Brazil more financially attractive to international and Brazilian non-governmental organizations (“NGOs”). Part I provides a description of a typical debt-for-nature swap, the purposes of a debt-for-nature swap, and the interests of the U.S. government and U.S. NGOs in debt-for-nature swaps. Part I also discusses the grounds for the initially adamant Brazilian opposition to debt-for-nature swaps and the recent moderation of this opposition. Part II reviews the changes in the policies of the Brazilian government toward debt-for-nature swaps, from the pragmatic but modest measures taken by the Collor administration (1990 to 1992) to the outright approval of debt-for-nature swaps by the Franco administration (1992 to present). Part III analyzes the differences between the current Brazilian debt-for-nature swap regulations and the proposed legislation, highlighting the benefits of the latter. Part III also sets forth several policy recommendations directed at the U.S. government and U.S. NGOs. Finally, this Note concludes that, if complemented by the policy recommendations presented in Part III, the proposed Brazilian legislation will weaken the lingering Brazilian opposition to debt-for-nature swaps and ensure that the interests of the U.S. government and U.S. NGOs in these transactions are preserved